METROLINK campaigners are putting the squeeze back on the Government after ministers agreed to look into a new package for the seemingly-doomed light rail extension.

The renewed push for phase three of Metrolink, with additional lines through to Manchester Airport via Didsbury and Chorlton, follows a huge public blacklash against the Government's decision to ditch the extension earlier this year.

The surprise breakthrough was made by a working party made up of 28 Greater Manchester MPs who have been lobbying Prime Minister Tony Blair and departmental ministers.

Transport minister Tony McNulty said this week that negotiations were underway with the working party to reduce the cost of the 'Big-Bang' extension.

He said: "We are having very serious discussions with Manchester and I would say that they have been extremely fruitful and productive.

"We want to find a way out of this position we're in now. The future of light rail isn't completely dead in Manchester or elsewhere but there are serious questions we need to look at in terms of the various aspects of funding."

Key to the renewed optimism surrounding the Metrolink lies in the belief that phase three can be salvaged by shaving £300 million off the original £1 billion outlay.

The working party and transport chiefs believe they can save £2 million through a joint private/public sector venture where the risk would be shared, and a further £1 million by persuading Manchester Airport to foot the bill for the Wythenshawe line.

Roger Jones, chairman of the Greater Manchester Passenger Transport Executive, said: "We are fairly confident that if we can guarantee at least 90 pc from the public sector before the private sector even pays a penny, we can get the extension up and running.

"We are now cautiously optimistic whereas two months ago we were very pessimistic. As long as the Government helps us repackage the Metrolink's funding we can have something in place by Christmas and the builders on site by next year.

"The bidders have been waiting for two years for a definite announcement and we are ready to go.

"That's why we are desperate for the Government to come to an agreement with us before Christmas. If not we have big problems because it would take us another 18 months to two years to put it back out to tender."

Coun Jones added: "We feel there has been a sea change regarding the Metrolink over at Westminster and that privately Tony Blair and John Prescott think the issue needs to be sorted out before the next election. What surprised them was the public reaction in Manchester."

By getting the public sector on board and taking on some of the risk the private bidders, including umbrella group the Manchester Tram Corporation, would feel less nervous about shelling out the capital needed to run the trams and maintain the tracks, said Coun Jones.

The safety net of the public sector would also mean the private companies would feel less edgy about committing themselves long-term and be guaranteed of getting their money back.

South Manchester MP Keith Bradley, a member of the Metrolink Working Party that brought together Department of Transport officials and representatives from the GMPTE, said: "It is true that we're moving in the right direction and the dialogue has been very constructive as we seek to find a way forward to get the Metrolink expansion back on track.

"It's still very much early days yet and there are some tough negotiations that lie ahead, but I think it's fair to say that the Government has taken into account the overwhelming public support for the Metrolink."

But he warned that "a project of this magnitude cannot be allowed to spiral out of control at a cost to the taxpayer".

Didsbury councillor David Sandiford, a fervent Metrolink campaigner, will travel down to London with others representatives from the GMPTA on November 10 to lobby Parliament.

He said: "The most important thing is not so much the cost but who shares the risk. I'm very hopeful that this might be resolved but we still need to keep the pressure on the Government to make sure that ministers don't go back on what they promise like they did the last time".